Germany’s new government has launched a major program aimed at boosting investment and helping Europe’s largest economy recover after two years of decline.

Chancellor Friedrich Merz and Finance Minister Lars Klingbeil announced the “growth booster” package on Wednesday. It includes tax breaks for businesses and a planned cut to corporate tax rates — from 15% to 10% — gradually starting in 2028.

The centerpiece is a generous tax write-off for companies investing in machinery and equipment over the next three years. Additional incentives will support the purchase of electric vehicles and private-sector research through mid-2027.

“We’re making Germany more competitive,” Klingbeil said, as the country tries to spark growth in an economy expected to stagnate this year.

The measures still need approval from parliament.

The new package is separate from a €500 billion fund already passed by lawmakers to modernize infrastructure across Germany over the next 12 years. Formal legislation for that fund is expected later this month.

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